subject; accounting

QUESTION 3 [22 MARKS] Fairvalue Ltd is a wholesale distribution firm which has provided you with the following information from stores in relation to a particular product line CRIS20 Dates Details Units Unit Price (BWP) Value (BWP) 08/3/12 Delivery from Manufacturer 500 10 5,000 12/3/12 Delivery from Manufacturer 100 11.20 1,120 17/3/12 Issued to sales 400 25/3/12 Delivery from Manufacturer 300 11.50 3,450 27/3/12 Issued to sales 250 Sales of 650 units @ P20 per item are recorded for the month. There is an opening stock of 250 units, valued at P2 000 at 1st March 2012. Required: a. Calculate the gross profit for the month of March 2012 using each of the following methods

of inventory valuation: (i) FIFO. (6 marks) (ii) LIFO. (6 marks) (iii) Weighted average. (6 marks) b. Explain which inventory valuation is most relevant for decision making purposes. (4 marks)